Why paying all cash for a house might not be a smart move

An interesting, brief article on things to consider before buying your home with cash instead of a mortgage.  Full Article

If you have the financial means as a buyer and you plan to hold the home for 5+ years, this strategy is worth considering.

A few things to remember, your home value is not related to how you paid for the home (cash or mortgage).

Ask yourself, can you invest this cash elsewhere and make a better rate of return? This gets a bit complicated when factoring in the tax breaks, cost of the mortgage interest, the initial loan closing costs, and cash flow. To keep it simple for decision making purposes, I use amortization schedule on the loan amount, the rate of interest, a 30- year mortgage, and assume I will hold the home for at least five years. It will give you the amount of interest paid for the first five years of the loan. Bankrate.com Amortization Calculator

amort schedule bankrate

 

 

 

 

h

About Farhat and Associates Real Estate

Professional - Our early careers were in Accounting, Property Management, and Technology fields. Both Aziz and I found our passion for real estate as we started in the industry as Investors. Since 2004, we have devoted ourselves to this business on a full-time basis and have sold 100s of homes for our clients. Personal - Our passions are our family, our dogs, outdoor activities, reading, photography, golfing, and discovering new foods/restaurants.
This entry was posted in Buyer Advice, Retirement. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s